The 2013 IA 25: Advisor Advocates and Regulators

Since the financial crisis, advisors have had to defend their businesses from wary consumers, overzealous legislators and sometimes even other advisors whose unscrupulous actions would cast good advisors in the same shadow as bad advisors.

There are those in the industry, though, that are working to build an industry that allows financial professionals to conduct business efficiently and protect consumers’ interests.

The people mentioned here are making an impact by working for an industry where neither the advisor nor the client suffers in the relationship; where advisors can provide the services their clients need and clients know their advisors are working for them.

Chet Helck, Raymond JamesChet Helck

At SIFMA, Chet Helck is looking closely at the way the industry is perceived by investors. “My most important goal for this year is to take on the issue of public trust and confidence,” he told Investment Advisor. “Trust and confidence in our institutions, in our markets, in our products and in our leadership has reached down to a level where it’s critical that we address it in order to restore that trust.”

That trust has implications beyond advisors and their businesses, too. “The markets can’t function in a healthy manner, the economy won’t regain momentum, employment won’t reach its target levels, and we won’t see economic growth until we have confidence in the future,” Helck said.

Dale Brown, FSIDale Brown

When reminded that this is the seventh year that he’s been named to the IA 25, Dale Brown was quick to give kudos to his entire team, noting that the Financial Services Institute’s success doesn’t hinge on his abilities alone. FSI’s staff, Brown told Investment Advisor, “sets priorities and makes sure those priorities are relevant to our members.”

Brown said one of FSI’s top goals this year is bringing more advisor members on board and “getting them personally involved in our advocacy mission.”

FSI is “working on the right issues; it’s challenging, but we’re getting results,” he said.

Eleanor BlayneyEleanor Blayney, CFP Board

Eleanor Blayney took up the role of the CFP Board’s consumer advocate at the beginning of 2009, after several months of discussions with CFP Board CEO Kevin Keller developing the position before the “true meltdown” took place.

“It was almost coincidence that the position that we thought about in the middle of 2008 was more needed than ever,” she told Investment Advisor. “We both acknowledged that Americans needed to understand more about the financial planning process and needed to understand more about the CFP designation and exactly what went into it.”

In her five years at the CFP Board, Blayney has spent her time trying to reach out to consumers. “Many times, what’s needed is to make all of the complexity of personal finance more accessible, give it a human dimension,” she said.

Larry Roth, Advisor GroupLarry Roth

As the 2013 chairman of the Financial Services Institute and president and CEO of Advisor Group, Larry Roth has a unique vantage point from which to view the industry. Of FSI, he told Investment Advisor “most of the big firms are now represented, as are mid-size firms and those that are privately held.”

The organization’s CEO and President Dale Brown does it, Roth explained, by having every member of the board sit on an operating committee, which makes sense: If you want to continually move things forward, be sure to leverage the leadership of people who run businesses on a daily basis.

Mary Jo White, Chairwoman, SECMary Jo White

Prior to being appointed the new SEC Chairwoman, Mary Jo White spent 10 years as a U.S. attorney in the Southern District of New York and became well-known for her prosecutions of organized crime figures and suspected terrorists. Now she’s pursuing a fiduciary standard for advice givers.

One of her “focus” areas while chairwoman, White said during her confirmation hearing in March, will be regulating the conduct of broker-dealers and investment advisors when giving retail investment advice.

She said at the hearing that she would “absolutely” make a priority of reviewing the public feedback the agency has been getting since March 1 regarding costs and benefits of a fiduciary rulemaking and that that finishing rulemaking mandates under the Dodd-Frank and JOBS Acts “in as timely and smart a way as possible” will be her top priority at the agency.

Phyllis Borzi, EBSAPhyllis Borzi

Despite taking a drubbing from the industry over her insistence on issuing a rule to amend the definition of fiduciary under the Employee Retirement Income Security Act, Phyllis Borzi remains steadfast in her conviction to do so.

After pulling the original draft of the fiduciary rule last year, Borzi and her team at the Department of Labor’s Employee Benefits Security Administration are planning to release a re-draft of that rule in July.

In an email exchange with Investment Advisor in mid-April, Borzi said that while EBSA’s regulatory agenda states the rule proposal’s release will come then, “we’re going to take the time we need to get this right.”

Richard Ketchum, FINRARichard Ketchum

It’s no secret that investment advisors are opposed to the Financial Industry Regulatory Authority becoming the self-regulatory organization that steps in to examine them—and, at least for the near term, it looks as though their wish has been granted.

As Richard Ketchum, FINRA’s CEO, said in a recent email exchange with Investment Advisor, “given the lack of consensus on the Hill” regarding an SRO for advisors, FINRA “is not pursuing legislation in either the House or Senate at this time.”

However, Ketchum told IA that FINRA “continues to believe that the current levels of investment advisor oversight and examinations are unacceptable and a risk to investors, and that this significant gap in investor protection needs to be addressed.” It’s undeniable, he said in his email, “that proper and timely oversight of investment advisors needs to be put in place sooner rather than later.”

William Galvin, Secretary of the Commonwealth of MassachusettsWilliam Galvin

According to William Galvin, Secretary of the Commonwealth of Massachusetts and its securities regulator, the state has been able to do what the SEC hasn’t in examining advisors.

Since last June, when advisors with assets of between $25 million and $100 million under management were required to switch from federal to state jurisdiction, Massachusetts has already examined 40% of the new firms under its purview, Galvin said, and has already “gotten a better feel for the nature of their businesses.”

Indeed, with a total of 929 advisors under its belt, Galvin said Massachusetts has “repositioned” exam personnel to be more efficient and to help create economies of scale when it comes to examining advisors.

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